tech/a
No Ordinary Duck
- Joined
- 14 October 2004
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EW can be handy
Chasing price.
I presume (correct me if wrong) That this means you don't place an order or buy if price trades over a pre determined entry price before you've taken a trade.
When discretionary trading having a hard and fast rule that could leave you at a disadvantage I personally think is not the best policy.
Pixel changed my mind when one day he told me about a friend of his who relished finding stocks that had taken off. They wouldn't be put off by a move above a resistance area.
I had to admit that I had watched many fly past me --- so I investigated.
I came up with the following rules for trading price which had moved away from an ideal entry.
Often this happened and Ill bet you'll be nodding when I say your nightly scan turns up a runner that you seemingly missed.
Firstly I'm not advocating taking every trade where you have to do some chasing.
(1) Never trade a price that has risen 30% or more (From your ideal buy price) before you see it.
(2) Gaps are good.
(3) Be aware of close resistance less than 6 mths.
(4) Beware of Massive volume-- moderate volume is preferable.
(5) Look for past price action which indicates effort to get price moving long term in your direction.
Here is a chart with all of the above.(Bottom Chart)
And then there is the question of position sizing and risk management.
The chart below is how I like to do it.(Top Chart)View attachment 69681 View attachment 69680
Here is what I think and I keep going back to the strong levels which can be calculated.
Now if your stock has had a good run up and is now consolidating in a sideways movement we can recalculate further strong levels both on the upside and downside and these are marked on the chart.
From here I we need to wait to see which way the stock is likely to break.
I will also try and work out what EW we are currently on if I can..... as it is not always obvious , this would give me some confidence as to where I am now and which way it is likely to move and how far it is likely to fall using EW Theory and in combination with the strong levels which have been calculated. As I have said previously I need to see at least 15% if not I stay out.
If I cannot work out the EW I may use Cycles Theory and in what phase I am in to make a trading decision,it just all depends.
Blue sky will eventually see resistance
How would you spot it?
For me there are 3 things to watch for
Attempting to predict where they could fall I have found to be as effective as swimming against a rip.
(1) Volume
(2) Range
(3) Tests
I have found you can pick the rip and see how to get out if it.
There are some key things to look for within the 3 indicators.
Often 1 and 2 will be very clear
At other times 3 may come into play
Perhaps you or someone could work through 1-3
If their findings are similar to my own
Hey Triathlete,
I have read on the very basics of Elliot wave theory and Dow theory, no idea on how to use fibbs lines or what cycle thoery is. Have you got any good resources and I can read about them? When I have some time, I shall do some google searches about them and maybe watch a few videos on them to understand it better.
From my very basic understanding of EW, I know price moves up in 5 stages and down in 3 stages, do you try and determine which stage you are sitting at and making a subtle prediction over where it could go from here on out?
Also with EW, the one thing that I notice (im not expert) is that you can perform EW over a 1 year chart, 3 year chart, 5 and 10 year chart and each of them could be telling you that you are in a different stage?
There is a lot to VSA which you don't/wont find in books
It is a fascinating field one which I have spent 20 yrs watching and analysing. Much is personal experience but I'm sure over time you'll see what I have seen. While conventional VSA is a good starting point it really is prep school.
Could you please elaborate on point 1,4 and 5?
1) Never trading a price that has moved 30% beyond my pre-determined entry price? If I found an opportunity and I set my buy price at $1.00, I cannot pay above $1.30 for the stock? OR If i found a stock that recently broke out and it moved up 30% already, to remove that out of my potential buys because it has already "exhausted" it's move?
This is a rule of thumb. Moves particularly with very high volume of 30+% in one session are to be looked at with suspicion. Very often a sign for a short play. The greater the % the riskier a buy is.
4) I always had the thoughts the a strong breakout coupled with strong volume was a good sign? I am no expert in volume analysis but from a B/O point of view, strong movement with strong volume = good sign? I got this from Leon Wilson's Business of Share Trading book
It can be but if volume is very high 5+ times average and range is 5 X average (see 1)
Strong volume with a gap moderate range finishing on a high is ideal. There is a lot then to come from the analysis of the up coming bars which you should in most cases be trading!---not looking!
5) Could you elaborate on point 5 for me, I don't quite understand that..
Price wont normally rise without some effort being seen on the buy side and also can be spotted with the lack of effort or desire from the sell side. you should become proficient at spotting effort from buyers and withdrawal from sellers (Who want to hold to make profit)
Some charts to illustrate and part explanation of 5
Ill do some more up when I get time.(They take a while!) That's why mentors like to be paid!
Click to expand
View attachment 69734 View attachment 69735 View attachment 69736
Hey Canoz,View attachment 69738 This one graphic says so much....
Can
I've never been any good at reading DOM
I find myself predicting shadows
Particularly liquid markets DOM changes dramatically in 20 seconds
Making any long term prediction (3 min)
I find impossible in fact I find it very distracting from what I'm reading in range
Volume and pattern
I've even tried to see what these guys on you tube see
Clearly blind !
I think you’re still misunderstanding what the depth recorder is showing you. It shows you where buyers/sellers have had their resting orders in the past and when the depth gets to that level you can see in real time if the orders are still there. As price gets to that level, you watch the for the reaction of the buyers/sellers or lack or reaction, you want that liquidity to be real and effective to stop and turn price. There are many different scenarios to trade off of, even times where a larger player will hit the resting orders and then cause a stop run that may result in a new trend. Because of the change to the laws on spoofing, the possibility that the resting orders in the book are real liquidity now is greater. The liquidity is real and you can see it. Search on Youtube for VeloxPro Bookmap and watch the video to see what I mean. It is literally looking inside your bars / candles. I can’t see an experienced technician like you finding this useless information.That's all well and good but from a practical point of view I can't see how it would be tradeable.
Would look pretty and interesting to look back on but if your sitting there with a buy in mind I can't see how it would be timely
We are looking for change which is easier to see after that change has occurred and confirmed.
I have actually ordered the book
Thanks Can I'll have a look.
As I said not my area.
To be honest I'm happy where I am.
For me it's simple / clear / repeatable.
I realise as I make up those charts that I could explain for chart after chart
What my brain sees in 60 seconds and when trading in seconds.
Not only that but what to do/ when to do it/ plan A,B,C
The often seen adage of find something that works for you
Prove it,then trade it. Is very true.
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